FAR 0_Quiz No.

2 (Cash & Cash Equivalents)

2nd Semester AY 2021-2022

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REQUIRING COMPUTATIONS.

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The following cash items, if recorded, must be DEDUCTED from the Cash in Bank balance per record
of the entity as at year end, EXCEPT
(1 Point)

long outstanding check received from a customer

post-dated check received from a customer

undelivered check to a supplier

outstanding check issued to a supplier

Which of the following cash items should not be included in the entity's CASH as at the end of the
year?
(1 Point)

Savings account set aside for the payment of currently maturing obligation at year-end

Current account held in a rural bank

3-month time deposit

compensating balance related to a long-term loan, not legally restricted as to withdrawal

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Which of the following investment items will NOT qualify as CASH EQUIVALENTS as at December
31, 2021?
(1 Point)

3-month time deposit

BSP treasury bill acquired by the entity on April 01, 2021,  maturing on January 31, 2022

preference shares with mandatory redemption of 3 months from the date of purchase

1-year money market placements, acquired on December 01, 2021, maturing on January 31, 2021

Which of the following statements is/are TRUE in relation to the measurement rules on cash and
cash equivalents?

1st Statement:

Cash equivalent items are measured at the face value of the related instruments.

2nd Statement:

Cash of an entity held by a bank or financial institution in the brink of bankruptcy or financial
difficulty is written down to estimated realizable value if the same is lower than the face value.

3rd Statement:

Cash in foreign currency is measured at the average exchange rate during the year.

(1 Point)

1st and 3rd statements

1st and 2nd statements

2nd and 3rd statements

1st statement ONLY

Which of the following statements is INCORRECT in relation to bank overdrafts?

(1 Point)

A bank overdraft may be OFFSET against another bank account if both bank accounts are maintained in the same bank.

A bank overdraft which cannot be appropriately offset against other bank accounts held by the entity shall be reclassified as
a NONCURRENT liability as at end of the year..

An overdraft is a CREDIT balance in the depositor's cash in bank account that results from the drawing of checks whose total
amount exceeds the balance of the entity's cash in bank account.

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Which of the following statements is TRUE in relation to the classification of compensating

balances?
(1 Point)

A compensating balance that is not legally restricted as to withdrawal and is related to a long-term loan should be included
as part of cash.

A compensating balance that is legally restricted as to withdrawal and is related to a short - term loan should be included as
part of cash.

A compensating balance that is legally restricted as to withdrawal and is related to a short - term loan should be captioned
as :cash held as compensating balance" and must be presented among noncurrent assets.

The following items should be added back to cash, except

(1 Point)

long outstanding checks issued to suppliers

post-dated checks issued to suppliers, unrecorded in the books of the payor

checks drawn, dated and recorded but unreleased to payees as at end of the period

Under the fluctuating fund system of accounting for petty cash fund, which of the following entries
would most likely not be recorded?
(1 Point)

charges against the fund

replenishment of the fund

adjusting entry at year end for unreplenished charges

increase or decrease in the fund

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Which of the following statements  is TRUE in relation to the accounting for cash shortages and
overages?
(1 Point)

The excess of cash per record over the actual cash counted  would require an initial credit to the  "cash short/over account"
upon discovery of the discrepancy.

A cash shortage is recognized outright as a loss from cash shortage regardless of the result of the investigation of the
discrepancy.

The "cash short/over" account is a temporary account that is eventually closed to the appropriate account following the
completion of the investigation  on the noted discrepancy between the cash per record and cash per actual count.

Overage exists if the cash per actual count is less than the cash per record.

10

(1 Point)

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(1 Point)

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(1 Point)

13

The Company's petty cash fund was established on December 01, 2021 with an initial fund balance
of Php 20,000.  As at December 31, 2021, the fund was not replenished and was comprised of the
following: Coins and currencies - Php 10,000; Paid vouchers for supplies - Php 3,000; Paid vouchers
for transportation - Php 2,000; Employee IOUs - Php 5,000.

On January 15, 2022, the fund was replenished and increased to Php 25,000.  Prior to the
replenishment, the fund was found to include the following: Coins and currencies - Php 2,000; Paid
vouchers for supplies - Php 6,000; Paid vouchers for transportation - Php 6,000; and Employee IOUs
- Php 6,000.

The Company adopts the imprest fund system in accounting for its petty cash fund.

How much petty cash fund should be reported in the Statement of Financial Position as at
December 31, 2021?
(1 Point)

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The Company's petty cash fund was established on December 01, 2021 with an initial fund balance
of Php 20,000.  As at December 31, 2021, the fund was not replenished and was comprised of the
following: Coins and currencies - Php 10,000; Paid vouchers for supplies - Php 3,000; Paid vouchers
for transportation - Php 2,000; Employee IOUs - Php 5,000.

On January 15, 2022, the fund was replenished and increased to Php 25,000.  Prior to the
replenishment, the fund was found to include the following: Coins and currencies - Php 2,000; Paid
vouchers for supplies - Php 7,000; Paid vouchers for transportation - Php 5,000; and Employee IOUs
- Php 6,000.

The Company adopts the imprest fund system in accounting for its petty cash fund.

How much supplies expense should be recognized for the period January 1 - January 15, 2022?
(1 Point)

15

(1 Point)

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(1 Point)

17

(1 Point)

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(1 Point)

19

(1 Point)

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Question
(1 Point)

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Question
(1 Point)

22

Cash deposits in foreign currency, if unrestricted, shall be included in cash and translated using
which exchange rate?
(1 Point)

average exchange rate during the year

current exchange rate when the foreign currency deposit was placed

current exchange rate at the end of the Company’s accounting period

exchange rate at the start of the Company’s accounting period

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Under the fluctuating fund system, the petty cash fund account is debited in the following
transactions, except
(1 Point)

Establishment of the fund

Replenishment of the fund

When the fund balance is subsequently increased

Reversing entry at the beginning of the following year if the fund is left unreplenished as at end of the current year

24

The following items are part of cash and cash equivalents except
(1 Point)

preference shares with mandatory redemption date of 3 months

savings deposit for employees’ payroll

unrestricted compensating balance related to a long-term loan

sinking fund set aside for the payment of a liability due to be paid 15 months after the end of the reporting date

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